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Illinois Gov. Rauner: Bankruptcy Should Be Option For Broke Cities

(CBS) -- Gov. Bruce Rauner said cash-strapped Illinois cities should be able to file for bankruptcy, as he renewed a push Monday for pro-business reforms that he insists will lure industry here.

Rauner invited members of the media to Springfield for one-on-one interviews. He wanted to talk about, among other things, the enormous challenge facing Chicago's budget and what happens if the city's pension liabilities become too much to bear.

It all revolves around Raunder's pet plan, dubbed "Illinois Turnaround."

CBS 2's Rob Johnson pressed Rauner on whether bankruptcy is a viable option, if public pension costs cannot be tamed through legislation. Rauner's proposals include making the option legal for Illinois communities.

"Many other states have allowed local governments to decide whether they need to declare bankruptcy," Rauner tells Johnson. "Bankruptcy law exists for a reason. It's allowed in business so that businesses can get back on their feet and prosper again by restructuring their debts."

"It's very important for governments to be able to do that, too," he added.

Mayor Rahm Emanuel's office issued a statement that said balancing the state budget on the backs of the local governments is itself a "bankrupt" idea. Rauner has proposed sweeping cuts in state assistance that have angered local officials.

Tuesday, several Democratic lawmakers are expected to introduce a bill to fight Rauner's pension reform plans – specifically, forcing new employees into a 401k-style plan.

Rauner says future cuts in social services may be less drastic in future years if local governments adopt his reform strategies, which include business-friendly "empowerment" zones.

He says he is open-minded about helping Chicago get a casino to help balance its budget, if the proper regulatory safeguards are built in.


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